I'm interested in purchasing a small apartment complex that doesn't seem to be very well-run. If the current landlord provides me documents (ie rent roll, expenses) but their records aren't kept well and the docs are probably wrong, will I have trouble getting bank financing for such a property?
Will the seller give you access to their bank account information? This will show what their income and expenses are. From this you can potentially create a T12 and proforma for the bank. I'd also request prior year tax returns and this can provide insight if the seller is being honest with what the property makes.
@Derek Morrison Be sure you get an estoppel certificate from each of the tenants. They must state how much their rent is and what deposits are being held by the landlord.
An estoppel prevents the tenant from falsely claiming later that you owe them money, like security deposits or advance rents.
In fact, getting estoppels should be a contingency on your offer.
Good tips guys. And that's a great idea about estoppel certificates!
@Derek Morrison , anytime the owner/landlord can't produce financials on the property will make it hard for you to obtain conventional traditional financing. You can court with a private or hard money lender that may be able to step in and help you, giving you enough time to stabilize the property. Once the property is stabilized you can get attractive financing with much better terms than a hard money lender can give you. Good luck on your journey